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Auditing Theory and Practice Coca Cola Amatil

   

Added on  2020-04-07

12 Pages2971 Words127 Views
1Running head: AUDITING THEORY AND PRACTICEAuditing Theory and Practice with reference to Coca Cola Amatil (Coca Cola)

2AUDITING THEORY AND PRACTICETable of ContentsIntroduction......................................................................................................................................3Question 1: Identification of the Key Inherent Risk Factors...........................................................4Risk and Its Possible Impacts......................................................................................................41. What is the Risk?.................................................................................................................42. Why is it a Risk?..................................................................................................................53. Appropriate Audit Objectives..............................................................................................6Question 2: Understanding the Audit Evidence Mix.......................................................................7Conclusion.......................................................................................................................................9References......................................................................................................................................11Page 2

3AUDITING THEORY AND PRACTICEIntroductionThis study encompasses real case example of Coca Cola Amatil, which is one of the largest company in Australia and has been operating since 1904. With global presence, the company is the world’s largest bottlers as well as distributors of the Coca Cola beverage range, which is operated, especially in the Asia Pacific region. The company has been constantly improving and adapting to the changes in the international market conditions (Coca Cola Amatil, n.d.a). The company aims to deliver shareholders returns, sustainably along with the availability of various facilities in production, warehouse and wide product range (Coca Cola Amatil, n.d.b).The objective of this particular study is to illustrate the significance of audit planning for a large company such as Coca Cola. The detailed understanding of the real issues that may be faced by the company, while auditing is also covered in this assignment. Furthermore, the key risk factors inherent in nature were identified, so that the impacts of the audit on the company could be analyzed. Thus, with the help of this, appropriate audit objectives to avoid such risks were also indentified considering the auditing theories and practices of the company. In the later part of thestudy, the impacts of identified risks on the nature of audit evidence mix were examined in relation to the company. Moreover, the evidence mix consists of five key elements namely tests of control, tests of balances, tests of transactions, analytical procedures and understanding internal control.Page 3

4AUDITING THEORY AND PRACTICEQuestion 1: Identification of the Key Inherent Risk FactorsRisk and Its Possible Impacts1. What is the Risk?Considering ‘Coca Cola Amatil’ (CCA), particularly auditing perspective was taken into consideration, wherein its key risks were identified, which could have an impact on the future audit proceedings such and all the activities related to it. As per the requirements, the potential misstatements that are evident while conducting the auditing procedures are done under the principles set up by the Australian Accounting Standards Boards (AASB) and ASX standards in compliance with Corporation Act 2001. It has been complying with the accounting, financing and auditing standards, thereby facilitating continuous disclosures under the ASX listing rules and regulations as well as Corporation Act 2001 (Coca Cola Amatil, 2016). As per the requirements, the company reviews its practices on a regular basis in order to enhance the overallperformance. This involves the key governance policies such as corporate governance, charters, various codes and policies and constitution (Coca Cola Amatil, n.d.c, CCA, 2016c). The four critically inherent risks that are highlighted in the case of Coca Cola Amatil were interest risks, market risks, financial disclosure risks and operation and control risks. Apart from these risks, there were tax risks as well, such as increase in the rate of income tax or changes in tax laws would have adverse effects on its financial results. Although, it is believed that the estimates of the company were reasonable however, tax audits have been undertaken frequently to avoid any kind of misrepresentation in the reports as per the Audit Committee (SEC, 2015). Therefore, to mitigate these risks, it ensured to maintain tax transparency in the field of auditing, financing and accounting disclosures in its financial reports (CCA, 2016b). Page 4

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